Ferry tone and concern causes investor to back away from Yarmouth

While they may revisit Yarmouth in the future, an investor says the ongoing tone surrounding the Nova Scotia-to-Maine ferry is creating a climate of uncertainty and, as a result, they are stepping away from a development they had planned for the area.

Issmat Al-Akhali, president and CEO of Blacksheep Project Management in Halifax, had chosen Yarmouth to develop student housing for NSCC students. Outside of the school year the accommodations would be used for tourists.

Developer and investor Issmat Al-Akhali.

But concerns over whether a ferry service will exist in future years – depending on the government in power – created a risk factor that Al-Akhali says caused financial backers to pull away. As investors, they worry that if there is no ferry service in future years it could cause the area to slump economically, as it did years ago when the service was lost. If investors wanted to sell their property, would anyone want to buy it?

“We know what the region’s situation was without the ferry and if there is even the slightest possibility it could go away, and it would slide back to the way it was, that is a big risk for us,” Al-Akhali says.

The N.S. government is into Year 4 of a 10-year contract with Bay Ferries to provide service between Nova Scotia and Maine. But Al-Akhali says there is so much rhetoric and negativity that it makes investors nervous.

“This is not a political position for us and we don’t want to single out a single party as a reason for it, but as long as the fate of the service has a question mark next to it, it’s very difficult for us to say ‘let’s go ahead,’” he says, adding they are now looking for a different location a “little less volatile.”

“We hope to circle back to look at Yarmouth once we see some consensus across political lines and the long-term viability of the ferry is not questioned anymore.”

The ferry service continues to be in the news for many reasons, one being the switchover from Portland to Bar Harbor as its U.S. port and the cost to the province of footing the bill for terminal work, and possibly customs workers, in Bar Harbor.

The province’s PC Party is suing the Liberal government, seeking the release of management fees that are included within the ferry’s annual subsidy. The government doesn’t want to release the fees, saying it would be harmful to Bay Ferries as a private company that operates other ferry services and/or may bid on other projects. It would give competitors an unfair advantage.

Beyond this, opposition members have questioned over the years whether the ferry deal is a good one for Nova Scotia.

Last year The Cat transported 50,185 people to and from Nova Scotia. Bay Ferries anticipates its move to Bar Harbor will lower operating costs – with a goal of bringing down the subsidy – while allowing it to tap into a robust tourism market.

CONCERNS EXPRESSED

The Cat ferry. TINA COMEAU PHOTO

Those who see the benefits of the ferry worry about the tone of ferry talk. The Yarmouth and Area Chamber of Commerce posted this to its Facebook page:

“The continued attacks on the service are resulting in lost investment for our region. We applaud Issmat Al-Akhali for being public about what is happening and the fact that this lost development is a direct result of the negative ferry messages. This only serves to raise more concern about what other investment has been lost as a result,” the post reads. “We know that this service is an essential part of our region’s infrastructure and supports the tourism industry of the entire province. We implore the opposition parties to stop using this critical investment as a political game.”

One of those who has been very vocal about the service and holding the government to account over money spent is Nova Scotia PC opposition leader Tim Houston. In a letter to the editor he sent out on Feb. 22 he stated, “I support tourism and I support the ferry. And, I believe that done right, a ferry service from Yarmouth is an important part of a robust tourism industry.”

He said the fight that has now entered the courts –to have the management fees released – is not a fight with tourism or the ferry. “It’s a fight against the Liberal habit of hiding information from taxpayers – information that the privacy commissioner has already ruled you have the right to know,” he said. “This isn’t about a ferry. It’s about democracy.”

But others say the way the deal has been referred to before by Houston and others does make it about the ferry because it undermines people’s confidence in the service. Years ago, some Tory members in Yarmouth asked then-PC leader Jamie Baillie to tone down attacks, referring in a letter to the “economic devastation” the region suffered after ferry service ceased.

One of the people very concerned by the tone is Yarmouth MLA Zach Churchill, who is also the province’s education minister.

“Let’s make no bones about it, they have attacked the ferry service. . . They have questioned the investment,” he says. “When people that can potentially be the premier of this province say these things, it undermines market confidence.”

He says news of the recent lost development for Yarmouth is a prime example.

Yarmouth MLA and education minister Zach Churchill. TINA COMEAU PHOTO

“And it impacts our marketing efforts. Every time someone Googles the ferry from the States, and they see all these negative comments, that doesn’t help us bring people here. It’s important that Tim Houston and the Conservatives understand that their commentary, although it might make sense politically, has a very real impact on the economy of our area, on the flow of money, on people’s ability to get financing . . . and on our efforts to make this ferry an ongoing success.”

Given that there is a huge provincial financial investment in the ferry service, opposition parties say the provincial government must be held accountable.

Churchill agrees transparency is important, but he also says it sends the wrong message to expect governments to breach a contract with a private company (in this case Bay Ferries) and disclose what is considered to be proprietary information.

Something that he does agree with the opposition about is that an economic impact study of the ferry would be useful to have. He says people don’t hear enough or know enough about how the service contributes to and supports the province’s economy.

Churchill notes the southwestern region of the province has contributed greatly to the province’s economy for a long time. It is worthy of added investment, he says.

“Our area, our lobster district, is the lobster capital of this country . . . We are playing our part. Our region is supporting the economy of our province. We’re supporting tax revenue for government and tourism is a big part of it. I think it is critical for governments to invest in all regions of this province and to invest in services that are generating such positive economic activity.”

THE FUTURE

Talk of the ferry isn’t driving everyone away. Rodd Hotels and Resorts is moving ahead with plans to reopen the Colony Harbour Inn – a hotel that closed in 2011 after ferry service had ceased.

Those were hard times in Yarmouth. Other motels in the area were converted into apartments and seniors housing. Part of one motel was demolished. Some other businesses closed. Yes, the lobster fishery is a big part of the economy, but it’s also seasonal. And so there was excitement, but more importantly optimism, when it was announced ferry service would return.

Property owners have made investments in their downtown properties on Yarmouth's Main Street.

Issmat Al-Akhali says he wanted his project to be a part of this rejuvenation. New tourism experiences and businesses have started, local businesses have invested in their properties and new businesses have opened, such as cafés and microbreweries.

“We started our research about a year ago, I’ve been back and forth to Yarmouth, researching some locations, talking to real estate agents and financing providers and lenders.” He says he’s seen a revival in the look and the feel of the town, compared to when there was no boat.

Still, when a population base is not as high as urban areas, and there maybe isn’t as much economic diversification, investors need to feel confident risks are worth taking.

“We were successful in doing that and we were hoping to start the new year and move forward with our plans to secure a location and purchase a property to start our construction this summer,” he says. But with the ongoing ferry talk, it was felt the risks might be too great.

“We just need to make sound decisions for the money that people have entrusted us with to spend,” he says. “Spending the money somewhere else will probably create as much return, but not with as much uncertainty.”